IT service providers double share in global ADM basket

Moumita Bakshi Chatterjee, TNNJan 5, 2007, 02.27am IST

NEW DELHI: Indian IT service providers have more than doubled their share in the global application development and maintenance (ADM) basket over the last three years, cornering 26% of large value contracts in the space during the first nine months of 2006, compared to a mere 12% share in 2003.

"During 2005, the total contract value (TCV) bagged by Indian IT service providers in the large ADM contract space was $1.3 billion or 17% of the global pie. In contrast, during the first nine months ended September 2006, the total value of contracts bagged by Indian players stood at $1.1 billion or 26% of the market," sourcing advisory firm TPI's partner Siddharth A Pai said.

Indian players were seen sinking their teeth into 12% of such contracts (deals over $50 million in value) in 2003 when they bagged contracts worth $0.75 billion. The numbers, however, dropped in 2004 when their share in the overall market shrunk to 6% and even the total contract value was lower at $0.62 billion.

In terms of the number of contracts, the Indian service providers — with seven contracts in their kitty — accounted for 25% of total number of global deals in the segment during the nine months ended September 2006. These players snapped up 15 large ADM deals during 2005, and this pegged their share at 30.6%.

In 2003, these companies had bagged five contracts (17.2% share), while the number of orders clinched by these players was lower in 2004 at 4-5 deals and 8.5% of the market-share.

"Typically India-based providers often operate below our $50 million contract threshold, as they frequently use master framework agreements, which have small up-front contract values, but which allow them to compete and grow from the inside. These service providers benefit from this penetrate-and-radiate approach, which helps them gradually gain scale and capabilities for the time being, and enables them to prove their worth on projects with smaller scope and complexity so that they may compete for larger contracts over time," Mr Pai said.